Verte's investment is not make or break for the company, Lichorowic said, but the package of incentives the city and state put together for companies moving to opportunity zones was key to Galen's decision to relocate from California.
Many cities and states, including Baltimore and Maryland, have added extra public subsidies to better compete for long sought investment in disadvantaged areas now designated as opportunity zones.
While all of Verte's investors want a return on their money, many also are interested in the social impact of opportunity zones, Mills said.
The state created an extra benefit for investing in Maryland biotech and cybersecurity companies in opportunity zones to compete with other states. Investors can get a tax break of up to $250,000 on their investment, which "substantially changes the risk profile," Mills said.
If the investors don't owe that much in taxes in Maryland, they can get a rebate for the remainder.
Still, there isn't a clamor yet for opportunity funds focused on business investments rather than some real estate in opportunity zones. A big reason is that the federal regulations were slow to come out, said John Lettieri, president and CEO of the Economic Innovation Group, a think tank that helps craft the opportunity zone tax policy.
Opportunity zones aim to move investors as a herd to the neighborhoods, he explained. But it takes time to move a herd.
Lettieri believes opportunity zone businesses will end up attracting the most attention from investors, and interest will increase in the next year or two.
"That window is when we really will be able to make a clearer judgment of the scale and scope of the marketplace and what is working," Lettieri said.
For now, Lettieri noted that such investing has been slow to catch on. In Baltimore, the only other opportunity zone investment has been in a mixed-use project called Yard 56. The insurance and investment management firm Prudential Financial said it would invest $150 million in the project across from Johns Hopkins Bayview Medical Center in East Baltimore.
Lettieri said prestigious anchors such as Hopkins likely will help attract investment in related businesses or nearby real estate.
Still, he said, the investment is not going to just show up. Cities like Baltimore will have to pursue it.
"This is an experiment," Littieri said. "We're trying to do something new and very hard. ... The status quo is not working for these communities."
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